Are those Clouds in the sky…Or The Winds Of Change? (Part 2/2)

Total Cost of Ownership – Coming on the back of a major recession many of the surviving businesses are now charting new courses for future growth and in some cases looking for a return to profitability.  Having just weathered a very difficult time financially, most businesses are still shy about opening up the spending floodgates.  At the same time they need to make some fundamental shifts in order to continue to remain relevant in the new economy as well as grow into new markets.  These requirements almost always drag along the need for better/new systems and processes to support the desired business changes.

For these organizations Cloud based SaaS models are ideal.  It allows them to implement new technology more quickly (granted with less customization) than the old on premise licensing models.  IT staffing requirements are negligible, there is no need to estimate hardware configuration requirements, purchase additional servers, databases, operating systems, or other middleware licenses.

Sure these costs are still buried in the Cloud model, but on economies of scale that allow for greater savings than they could negotiate on their own, and now most of the guess work that often accompanied purchasing new systems has been removed.

Robustness

As discussed above, much of the guesswork involved in acquiring a new system is eliminated through Cloud based SaaS models, but the advantages go even further.  In this new business paradigm it is now the solution providers responsibility to provide highly reliable, broad based system support, regardless of office location and time zone.  They also implement all version upgrades to the software for all of their customers seamlessly with little or no down time.  System security, privacy, and data backup requirements are all included in the annual subscription fee and are no longer the responsibility of the customer.

Integration is managed through published API’s or standardized system connectors meaning customization tool kits become a thing of the past.  Instead customers need only focus on determining which of the delivered configurable business processes best support their business needs.

The real advantages for customers will come from the scalability of Cloud based business applications.  Double your business in one quarter or buy a competitor?  Great.  One call to your solution provider and the all necessary changes are made to make sure you have the system resources required to handle the increased business, thus alleviating growth concerns and allowing customers to focus on delivering their own core products and services.

The Big Upside

Cloud drives innovation.  In the future I expect we will see a much greater focus on vertical IP, which will provide customers with more industry specialized functionality than has ever been available before.  This is also a significant opportunity for system implementers and consulting organizations.  Now, instead of one-off engagements to configure a solution for a customer in a particular industry vertical, the opportunity exists to capture the IP that is created and bundle it together with all the other applications available on the cloud, and sell it to a much wider audience.  This levelling of the playing field where anyone can easily provide a solution via the Cloud to a very wide marketplace removes a huge business barrier that has existed up until today.  Historically, unless you were a large software company with a considerable field organization, it was both challenging and cost prohibitive to produce an application, then market, sell, deliver, and implement it widely on a national or even global scale.  The cloud business model changes all that and should drive a virtual explosion of innovation.

Additionally, as customers adopt Cloud based SaaS solutions more broadly throughout their businesses, they will naturally reduce the amount of in-house IT skill sets that they employ.  This will provide an opportunity for our industry to concentrate those skill sets in our own organizations, where they will arguably be exposed to many more interesting challenges than employment at a single business would afford them. The result of this shift should be better more experienced IT professionals and customers who automatically look to their trusted partners for support instead of trying to build talent internally.

Are things going to change with the shift to Cloud computing?  Absolutely, but like the shift to Client Server a couple decades ago, this change will mean significant opportunities for those solution providers and businesses who can see which way the wind is blowing and react quickly.  Good luck and good selling!

– Software Delivered as Promised. No Surprises.

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George Brown

Insight written by George Brown

Senior Vice President at Rand Group

A thought leader and pioneer in the areas of cloud computing, sales and marketing, George is a highly regarded subject matter expert and leader with over 30 years’ experience in strategically propelling businesses forward.

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